How to Measure Sales Performance

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Every business owner wants to understand how his business is performing. Sales success can be measured many different ways, but calculating gross profit is typically the most useful metric to measure.

Calculate gross sales. Work with an accountant or bookkeeper to track sales revenue.

Adjust gross sales for returns and allowances. Subtract all returns and sales allowances from gross sales to calculate net sales.

Subtract the cost of goods sold from net sales. This answer is your gross profit.

Compare your actual gross profit with your goal. Sales success can be defined as being on target to reach a gross sales goal for a given month, quarter or year.

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